Case Number: BC686407 Hearing Date: June 06, 2018 Dept: J

Re: Felix Fontebo, et al. v. Airbnb, Inc., et al. (BC686407)

MOTION TO COMPEL ARBITRATION

Moving Parties: Defendants Airbnb, Inc. and Airbnb Payments, Inc.

Respondents: Plaintiffs Felix Fontebo, Sally Fontebo, Njie Takere and the Estate of Njiek Fontebo

POS: Moving OK; Opposing untimely filed; Reply OK

Plaintiff Njie Takere leased the property located at 1156 Crestbrook Court in Diamond Bar (“subject property”), which was owned by Defendants Wu Yongqian (“Yongqian”) and Shey Yuying (“Yuying”), for himself and 6 guests through Airbnb for the 6/1/17-6/4/17 time period. On 6/2/17, Njiek Fontebo went for a swim in the subject property’s residential pool and drowned. The complaint, filed 12/8/17, asserts causes of action against Defendants Airbnb, Inc., Airbnb Payments Inc., Yongqian, Yuying and Does 1-50 for:

Breach of Fiduciary Duty;
Negligence;
Violation of the Consumers Legal Remedies Act (Civil Code §§ 1750, et seq.)
Violation of Business and Professions Code §§ 17500, et seq. (Untrue, False and/or Misleading Advertisement);
Wrongful Death;
Intentional Infliction of Emotional Distress;
Negligent Infliction of Emotional Distress;
Breach of Contract; and
Survival Claim

On 4/26/18, this case was transferred from Department 2 (personal injury hub) to this department. A Status Hearing is set for 6/6/18.

Defendants Airbnb, Inc. and Airbnb Payments, Inc. (“Airbnb”) move the court for an order, per 9 U.S.C. §§ 1, et seq. and CCP §§ 1280, et seq., compelling arbitration of all claims asserted by Plaintiffs Felix Fontebo, Sally Fontebo, Njie Takere and the Estate of Njiek Fontebo (“plaintiffs”) and staying the proceedings in the instant action until arbitration is completed, on the basis that they are bound by the terms of an executed arbitration agreement which requires that any dispute arising out of the use of the Airbnb platform and related services be resolved by binding arbitration.

REQUEST FOR JUDICIAL NOTICE:

Airbnb’s request for judicial notice is ruled on as follows: Granted as to Exhibit “1” (i.e., complaint filed 12/8/17 in case styled Fontebo, et al. v. Airbnb, Inc., et al., Case No. BC686407), to the extent that the court takes judicial notice of its existence and filing date; Granted as to Exhibit “2” (i.e., death certificate of Njiek Fontebo) and Denied as to Exhibits “3”-“6” (i.e., orders granting motions to compel arbitration in Case Nos. BC581681, 16-cv-00933 (CRC), BC601165 and BC651607, respectively).

At the outset, plaintiffs claim that the motion is improper because, while Airbnb was provided with a courtesy copy of the complaint, it was never formally served in this case. (Opposition, 5:2-9). California Rules of Court Rule (“CRC”) 3.110(b) requires that “the complaint must be served on all named defendants and proofs of service on those defendants must be filed with the court within 60 days after the filing of the complaint.” Plaintiffs filed their complaint on 12/8/17; however, they have not filed any proofs of service to date reflecting service of the summons and complaint on any of the defendants. Plaintiffs have not provided the court with any authority which forbids a defendant from responding to a complaint prior to service of that complaint upon defendant. Airbnb elected to file the motion in lieu of an answer pursuant to CCP § 1281.7.

Also, plaintiffs’ contention that the “majority of the arguments for arbitration” have been rendered moot because its proposed First Amended Complaint (“FAC”) “removes the sole party, Njie Takere, who signed the Terms of Service Agreement,” is not well taken. (Id., 5:9-13). Plaintiffs have not filed their FAC, nor has a dismissal been filed on behalf of Plaintiff Njie Taeke (“Njie”). Moreover, CCP § 472(a) states that “[a] party may amend its pleading once without leave of the court at any time before the answer.” Airbnb filed the motion in lieu of an answer; as such, it would seem that plaintiffs may not file their proposed FAC without obtaining leave of court.

“A written provision in…a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract…shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. “A party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition [the court]…for an order directing that… arbitration proceed in the manner provided for in such agreement.” 9 U.S.C. § 4.

“Section 2 is a congressional declaration of a liberal federal policy favoring arbitration agreements, notwithstanding any state substantive or procedural policies to the contrary. The effect of the section is to create a body of federal substantive law of arbitrability, applicable to any arbitration agreement within the coverage of the Act.” Moses H. Cone Memorial Hospital v. Mercury Construction Corp. (1983) 460 U.S. 1, 24.

An agreement that the FAA governs the parties’ dispute is binding and enforceable. See Gloster v. Sonic Automotive, Inc. (2014) 226 Cal.App.4th 438. “By its terms, the [FAA] ‘leaves no place for the exercise of discretion by a…court, but instead mandates that…courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed.’ Dean Witter Reynolds Inv. v. Byrd (1985) 470 U.S. 213, 218). The court’s role under the Act is therefore limited to determining (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue. See 9 U.S.C. § 4; Simula, Inc. v. Autoliv, Inc. (9th Cir. 1999) 175 F.3d 716, 719-720; see also Republic of Nicaragua v. Standard Fruit Co. (9th Cir. 1991) 937 F.2d 469, 477-478. If the response is affirmative on both counts, then the Act requires the court to enforce the arbitration agreement in accordance with its terms.” Chiron Corp. v. Ortho Diagnostic Systems, Inc. (2000) 207 F.3d 1126, 1130.

In this case, Njie leased the property located at 1156 Crestbrook Court in Diamond Bar (“subject property”), which was owned by Defendants Wu Yongqian (“Yongqian”) and Shey Yuying (“Yuying”), for himself and 6 guests through Airbnb for the 6/1/17-6/4/17 time period. Plaintiffs allege that on 6/2/17, Njiek Fontebo went for a swim in the subject property’s residential pool and drowned.

An Agreement to Arbitrate Exists

Airbnb Product Manager, Kyle Miller (“Miller”), explains that Airbnb provides a platform that connects third-parties who wish to offer their accommodations (called “Hosts”) with third-party travelers seeking to book accommodations (called “Guests”), which is accessible online at http://www.airbnb.com and via mobile application. (Miller Decl., ¶ 2). At all times relevant to the litigation, Airbnb users were required to agree to the then-current Terms of Services (“TOS”) before they could create an Airbnb account, list or book an accommodation via the Airbnb platform, or send messages via the Airbnb platform. (Id., ¶ 5). Airbnb users are also required to agree to any updated TOS before they could continue accessing the Airbnb platform after the effective date of the update. (Id.).

Prospective users who seek to transact using the Airbnb platform are first required to proceed through Airbnb’s account creation process. (Id., ¶ 6). When a user signs up for an Airbnb account, the user is required to press a button affirmatively indicating that they agree to the Airbnb TOS, which is visibly hyperlinked. (Id.). The user is given an opportunity to review the terms before agreeing to create an account. (Id.). When Airbnb updates its TOS, it requires its account holders to agree to the updated TOS as a condition of their continued use of the Airbnb platform, website, and services. (Id.). In order to inform users of the update before the effective date, Airbnb sends emails to each of its account holders notifying them of the update and providing them an opportunity to preview the updated TOS directly from the email via hyperlink. (Id.). Then, the first time that account holders logged into their Airbnb accounts after the effective date of the update, they were presented with the TOS, either in a scroll-box or as a hyperlink, and required to affirmatively click an electronic button agreeing to the updated TOS. (Id.). The electronic button is accompanied by text indicating acceptance of the updated TOS. (Id.). Users are required to click the button before transacting with other users via their Airbnb account or using Airbnb’s services. (Id.). Following a consent event, Airbnb does not allow any user to log in, interact with other users, create listings, or book reservations using the Airbnb platform until after he or she has accepted the updated TOS. (Id.). Airbnb’s current TOS are also publicly available by hyperlink on its homepage, www.airbnb.com, and directly at www.airbnb.com/terms. (Id., ¶ 8).

Njie used the Google sign-up method on a Windows desktop to create an Airbnb account on 3/4/16. (Id., ¶ 9, Exh. A). Airbnb records the dates on which each user agrees to each version of the TOS and regularly maintains those records in the ordinary course of its business (Id., ¶ 10). Airbnb is in possession of the initial sign-up screen presented to Njie on 3/4/16 when he began the account creation process; this shows that he was presented with four click buttons: “Sign up with Facebook,” “Sign up with Google,” “Sign up with Amex” and “Sign up with Email.” (Id., ¶ 10, Ex. B). Njie was also presented with language stating, “By signing up, I agree to Airbnb’s Terms of Service…” (Id.). The “Terms of Service” referenced was also set off in different colored font and hyperlinked so the user could click to read the full document. (Id.).

In addition to assenting to Version 4 Airbnb’s TOS during his 3/4/16 sign-up, Njie subsequently agreed to the TOS three more times: more specifically, he agreed to Version 5 on 9/12/16, Version 6 on 5/3/17 and Version 7 on 9/19/17. (Id., ¶ 12, Exh. D). The TOS Updated 10/27/16 (Id., ¶ 14, Exh. G) states, in pertinent part, as follows:

“Airbnb provides an online platform that connects hosts who have accommodations to list and book with guests seeking to book such accommodations (collectively, the ‘Services’), which Services are accessible at www.airbnb.com and any other websites through which Airbnb makes the Services available (collectively, the ‘Site’) and as applications for mobile, tablet and other smart devices and application program interfaces (collectively, the ‘Application’)…

By using the Site, Application or Services, you agree to comply with and be legally bound by the terms and conditions of these Terms of Service (‘Terms’), whether or not you become a registered user of the Services. These Terms govern your access to and use of the Site, Application and Services and all Collective Content (defined below), and your participation in the Referral Program (defined below), and constitute a binding legal agreement between you and Airbnb…

34. Dispute Resolution

If you reside in the United States, you and Airbnb agree that any dispute, claim or controversy arising out of or relating to these Terms or the breach, termination, enforcement, interpretation or validity thereof, or to the use of the Services or use of the Site, Application or Collective Content (collectively, ‘Disputes’) will be settled by binding arbitration…

Arbitration Rules and Governing Law. This agreement to arbitrate evidences a transaction in interstate commerce, thus the Federal Arbitration Act governs the interpretation and enforcement of this provision. The arbitration will be administered by the American Arbitration Association (‘AAA’) in accordance with the Consumer Arbitration Rules (‘AAA Rules’) then in effect, except as modified by this ‘Dispute Resolution’ section…The Federal Arbitration Act will govern the interpretation and enforcement of this section…”

Users, moreover, are alerted to the Arbitration provision of the TOS in the very first paragraph of the TOS in bold capital letters:

“IF YOU RESIDE IN THE UNITED STATES, PLEASE NOTE: SECTION 34 OF THESE TERMS OF SERVICE CONTAINS AN ARBITRATION CLAUSE AND CLASS ACTION WAIVER. IT AFFECTS HOW DISPUTES WITH AIRBNB ARE RESOLVED. BY ACCEPTING THESE TERMS OF SERVICE, YOU AGREE TO BE BOUND BY THIS ARBITRATION PROVISION. PLEASE READ IT CAREFULLY.”

The TOS applies to Njie because expressly consented to same when he “clicked to agree” at sign-up with Airbnb and when he booked the stay at the property.

The TOS also applies to the remaining plaintiffs. The case law in California binding non-signatories to arbitrate their claims falls into two categories: (1) those where “a benefit was conferred on the non-signatory as a result of the contract, making the non-signatory a third party beneficiary of the arbitration agreement” and (2) those where the non-signatory was bound to arbitrate “because a preexisting relationship existed between the non-signatory and one of the parties to the arbitration agreement, making it equitable to compel the non-signatory to also be bound to arbitrate his or her claim.” County of Contra Costa v. Kaiser Foundation Health Plan, Inc. (1996) 47 Cal.App.4th 237, 242. Within these two categories, there are “six theories by which a non-signatory may be bound to arbitrate: ‘(a) incorporation by reference; (b) assumption; (c) agency; (d) veil-piercing or alter ego; (e) estoppel; and (f) third-party beneficiary.’” Young Seok Suh. V. Superior Court (2010) 181 Cal.App.4th 1504, 1513. A non-signatory plaintiff may be estopped from refusing to arbitrate when he or she asserts “[c]laims that rely upon, make reference to, or are intertwined with claims under the subject contract.” JSM Tuscany, LLC v. Superior Court (2011) 193 Cal.App.4th 1222, 1239. Whether or not arbitration provisions are operative against a non-signatory involves a question of “substantive arbitrability” which is to be determined by the court. Unimart v. Superior Court (1969) 1 Cal.App.3d 1039, 1045.

Here, the TOS explicitly states that use of the “Services,” whether or not one is a registered user, operates as consent to the TOS. In addition, there even though Plaintiffs Felix Fontebo and Sally Fontebo did not directly “click” to agree to the TOS, they received and took advantage of benefits by actually staying as guests at and otherwise using the property. In addition, there was a preexisting relationship between Njie and the other plaintiffs. Plaintiffs Felix Fontebo and Sally Fontebo are Njie’s uncle and aunt, respectively and the decedent, Njiek Fontebo, was Njie’s cousin.

Issues of Enforceability and Arbitrability Have Been Delegated to the Arbitrator

“’[U]nlike the arbitrability of claims in general, whether the court or the arbitrator decides arbitrability is “an issue for judicial determination unless the parties clearly and unmistakably provide otherwise.”’ Oracle Am.[, Inc. v. Myriad Grp. A.G. (9th Cir. 2013) 724 F.3d [1069] at 1072 (quoting Howsam v. Dean Witter Reynolds, Inc. (2002) 537 U.S. 79, 83). ‘In other words, there is a presumption that courts will decide which issues are arbitrable; the federal policy in favor of arbitration does not extend to deciding questions of arbitrability.’ Id. Clear and unmistakable evidence of an agreement to arbitrate arbitrability ‘might include…a course of conduct demonstrating assent…or…an express agreement to do so.’ Momot v. Mastro (9th Cir. 2011) 652 F.3d 982, 988 (quoting Rent-A-Ctr., W., Inc. v. Jackson (2010) 561 U.S. 63, 79-80).” Mohamed v. Uber Technologies, Inc. (2016) 848 F.3d 1201.

“[T]he delegation must not be revocable under state contract defenses such as fraud, duress, or unconscionability. (Id. at p. 68; Sonic—Calabasas A, Inc. v. Moreno (2013)] 57 Cal.4th [1109,] at pp. 1142-1143).” Tiri v. Lucky Chances, Inc. (2014) 226 Cal.App.4th 231, 242. Any defense, however, must be specific to the delegation clause. Id. at 244.

Plaintiffs contend that their claims are not encompassed in the TOS. However, the language of the TOS “clearly and unmistakably” indicates the parties’ intent for the arbitrator to decide the threshold question of arbitrability (i.e., “any dispute, claim or controversy arising out of or relating to these Terms or the breach, termination, enforcement, interpretation or validity thereof, or to the use of the Services or use of the Site, Application or Collective Content (collectively, ‘Disputes’) will be settled by binding arbitration…”). Additionally, the TOS incorporates the American Arbitration Association (“AAA”) Consumer Arbitration Rules, which give the arbitrator the authority to rule on his or her own jurisdiction. See AAA Consumer Arbitration Rule 14(a), available at www.adr.org, under “Rules” tab (“The arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement or to the arbitrability of any claim or counterclaim”).

Plaintiffs do not attack the delegation clause itself. It will be for the arbitrator to consider the enforceability and conscionability of the agreement.

The motion, then, is granted. The case is placed on special status and is ordered stayed pursuant to CCP § 1281.4 pending completion of the arbitration.